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Three Types of AI Investments to Consider


Since ChatGPT exploded in popularity in 2022, artificial intelligence (AI) has gained an image as a once-in-a-lifetime investment opportunity comparable to the early days of the internet and smartphones. But exactly how to exploit that opportunity is not necessarily obvious. You can’t invest directly in OpenAI, the privately held company behind ChatGPT. But one way to invest in AI is by purchasing shares of public companies that are major investors in ChatGPT and other private AI pioneers. Investments in publicly traded chipmakers and other contributors to AI infrastructure offer another option, as do funds that invest in a diverse range of AI-related businesses. If you’re interested in adding AI investments to your investment portfolio holdings, you can also consider talking it over with a financial advisor.

The Basics of AI Investments

Excitement about AI has focused on a subset of the technology called generative AI. That’s the kind of AI that drives high-profile chatbots like ChatGPT, Anthropic’s Claude and Google’s Bard, as well as image generators such as DALL-E, also from OpenAI. However, the AI industry is broad; there’s AI-related activity in machine learning, computer vision, neural networks, and robots, as well as ancillary areas such as cloud computing, web search and tools for software developers.

Compared to the wide variety of ways in which AI promises to impact society, the AI investment opportunities for most investors are much narrower. One reason is that, as is common with new technologies, many AI innovations come from young companies that aren’t public. Some major publicly traded companies are getting into AI, but these companies already have many other lines of business, so they aren’t pure AI plays.

In the not-too-distant future, many AI pioneers will likely have initial public offerings and offer shares to the public. Right now, however, the easiest and least risky choices for AI investments come down to buying shares in three types of companies:

  1. Large established technology firms that are investing in other AI companies as well as their own technologies.
  2. Established software and hardware companies that serve as providers to AI-focused companies, offering necessities such as specialized computer chips.
  3. AI-focused investment funds.

AI Investment Options

Financial advisors discussing AI investments.

If you’re looking to buy shares of individual companies that have exposure to AI, the following are some of the best-known firms on the planet. While these companies aren’t entirely focused on AI, they are focusing on the industry to varying degrees, and their shares are easy to buy on the major stock exchanges. Some of the choices include:

  • Microsoft (MSFT). A major investor in OpenAI, Microsoft has its own AI-powered chatbot, Bing.
  • Alphabet (GOOG). Google’s parent has an AI-driven chatbot called Bard, and is targeting AI-powered web search as the wave of the future.
  • Meta (META). The Facebook and Instagram parent has cited investing in AI as a driver of its future growth.

Another approach to AI investments is to consider infrastructure providers. These are companies that sell their products and services to the companies that are developing AI applications. Options include:

  • Nvidia (NVDA). This chipmaker dominates the global market for advanced chipsets vital to run AI applications.
  • Marvell Technology (MRVL). A maker of chips for data centers, routers and other devices supporting AI infrastructure.
  • Taiwan Semiconductor Manufacturing (TSM). A top producer of the most advanced chips.

None of these companies are guaranteed to benefit from the AI boom, but they are all significant players in the AI space.

The third way to invest in AI is through the growing number of exchange-traded funds (ETFs) that are more or less focused on AI. Shares of these funds represent ownership in a diversified cross-section of companies large and small, old and new, all participating in AI in various ways. Here are some ETFs centered on AI and their top holdings:

  • Global X Artificial Intelligence & Technology ETF (AIQ). Nvidia and Meta are its two top holdings.
  • Roundhill Generative AI & Technology ETF (CHAT). Top holdings include Nvidia, Microsoft and Alphabet.
  • ROBO Global Robotics and Automation Index ETF (ROBO). This ETF’s top holdings are smaller companies applying AI in automation, healthcare and other fields.

Future Opportunities and Risks

AI is still early in the cycle of technology adoption, and it’s likely that some of the most successful AI companies haven’t even appeared yet. Accordingly, investing in AI may be viewed as a marathon rather than a sprint, with an opportunity to build long-term value rather than gather quick gains.

Along with new applications and AI investment opportunities will come the potential for new risks. Regulation is one wild card. Along with promising to improve efficiency and quality of processes and products, AI also threatens to displace workers on a vast scale. Some AI experts even warn that AI could escape human control and threaten the viability of the species.

In response, governments around the world are contemplating regulations and planning laws intended to avoid the most frightening scenarios and limit the possible impact on workers. Regulation could, in addition, limit AI investment opportunities in ways that are hard to predict.

Bottom Line

A couple discussing AI investments with their financial advisor.

AI is a big topic, but it’s not easy to invest in. Most pure AI investment plays are small, privately held firms. Publicly traded AI leaders are generally mega-cap technology firms exposed to many businesses, including some that AI may eventually threaten. Options for AI investments include buying shares in bigger companies with significant stakes in AI or AI infrastructure, as well as investing in AI-focused ETFs.

AI Investment Tips

  • If you are looking at adding AI investments to your portfolio, a financial advisor can help you assess the risks and opportunities. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Whether you invest in AI or something less cutting edge, you can use SmartAsset’s Investment Return and Growth Calculator to see how our money will grow over time.

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